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Japan’s LINE social network could challenge global competitors

LINE is a cross-platform communication service and app, offered for free by Naver, from NHN Japan. The basic functionality allows users to send text messages and to make free calls with other users who have the app installed on their smartphones. The service launched just 13 months ago, on June 27, 2011, and its growth rate has been simply amazing, with 45 million users currently registered — 20 million of whom are in its homeland. The rapid growth of LINE is currently one of the hottest Internet topics in Japan.

The 20 million registered Japanese users already makes LINE a real challenger to domestic social-network giants Mixi, Gree and Mobage, which each have around 25-30 million users. International players Twitter and Facebook have around 20 million and 10 million Japanese users respectively, and it took each of them much longer to amass those numbers. As LINE requires a unique phone number for each registration, 20 million users equates to 20 million cellphones (out of a total of 130 million) — pretty impressive for a service that did not exist until early 2011.

LINE initially started as a text-messaging service allowing users to text-chat with other LINE users or have group-chats with multiple users. Once the app is installed it’s easy to know which of your friends also has the app installed as LINE simply looks at the numbers in your address book and cross-checks them with registered LINE users. If a user has friends who are already on LINE, at registration the app will suggest friends to add to your LINE-friends network. The app also works on regular cellphones, meaning smartphone users can send LINE messages to Japanese feature phones (aka “dumb-phones,” which still occupy 75 percent of the market).

Three months after its launch, the ability to make free voice calls from smartphones was also added to LINE. If users have a flat-data plan, or are connected to WiFi, all calls to other LINE users will cost nothing. This is obviously of great appeal and due to the simplicity of registering with an existing phone number rather than having to give an email address, LINE is also giving Skype a run for its money.

NHN Japan, which runs LINE, is a Japanese subsidiary of Korean Internet giant NHN, which owns Korea’s largest search portal Naver and the Korean gaming portal Hangame. The successful Hangame model for PC-based gaming was the inspiration for Mobage and Gree, which transplanted the idea into the Japanese cellphone-based game market. NHN Japan also bought struggling Internet company Livedoor.

Part of the success of LINE comes from its aggressive advertising campaign. After seeing the huge success that social-game platforms Gree and DeNA’s Mobage had with their TV commercials, LINE has followed the winning formula with a series of commercials starring British-Japanese TV personality Becky.

Although the rapid expansion of the service seems to be following a typical attract-users-first-worry-about-the-profit-later model, LINE is already earning decent money by selling virtual “stamps,” which are inserted into messages. These are made up of cute or amusing cartoons or icons, much like emoticons, and NHN Japan recently revealed that it sold ¥350 million worth of stamps in just two months.

Major brand names are jumping on board too, with companies such as Coca-Cola, Nisshin Food and Lawson opening official LINE accounts and offering branded stamps that they hope users will share with their friends. Several celebrities — including Becky, GACKT and Mai Kuraki — have also opened official LINE accounts, from which fans may receive messages.

Critics of LINE point out that the ease with which people can send messages — and the fact that there is no age limit — makes it possible for sexual predators to contact minors, and indeed there has already been the reported rape of an underage girl by a person who met her using LINE.

The exchange of LINE IDs is also happening outside of the LINE network, adding to the problem. For example, anonymous BBS, third-party matchmaking apps and even reviews of the official LINE app on app stores are filled with comments such as “Hey, my Line ID is blah blah. Please contact me.” However, this kind of thing arises whenever there is a new kind of social network and NHN Japan has experience with dealing with such problems on its Hangame network. Though the company says it will delete such messages, I doubt this will be possible as Naver does not have control over external forums.

The numbers show that LINE is not only expanding in Japan but is attracting many users from foreign countries, mainly in Asia. English, Korean and Chinese languages are supported on its apps. While there are, of course, many competitors in this arena, a Japanese social-network service — supported by non-Japanese users from its inception — is very rare. It would be a wonderful thing for Japan’s tech industry if LINE became a real player in the international Internet market.

And backed by its 20 million user-base, NHN Japan really seems intent on becoming a viable social-network platform. On July 3, the company introduced a “Timeline” feature to LINE, allowing users to share recent messages, photos and videos with friends — something that will sound familiar to Facebook and Twitter users. Though, as LINE already has more Japanese users than those social networks, if this transformation succeeds, it will be huge.

Akky Akimoto writes for Asiajin.com. Japanese translation will be released on ja.asiajin.com. You can follow him @akky on Twitter.